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  • IN THE HIGH COURT OF SOUTH AFRICA /ES

    (GAUTENG DIVISION, PRETORIA)

    DELETE WHICHEVER IS NOT APPLICABLE

    (1) REPORTABLE: YES / NO

    (2) OF INTEREST TO OTHER JUDGES: YES / NO

    (3) REVISED

    DATE SIGNATURE

    CASE NO: 22496/2013

    DATE: 12/1/2015

    IN THE MATTER BETWEEN

    CFIT (PTY) LTD APPLICANT

    AND

    THE MINISTER OF DEFENCE 1ST RESPONDENT

    THE CENTRAL PROCUREMENT SERVICES

    CENTRE: DEPARTMENT OF DEFENCE 2ND RESPONDENT

    THE DEPARTMENTAL CENTRAL PROCUREMENT

    BOARD: DEPARTMENT OF DEFENCE 3RD RESPONDENT

    SPECSOFT SOFTWARE SOLUTIONS (PTY) LTD 4TH RESPONDENT

    JUDGMENT

    PRINSLOO, J

  • 2

    [1] The applicant applies for the reviewing and setting aside of the respondents' decision to

    withdraw the tender issued under the Request for Proposal concerning the National

    Codification System (BID CPSC/B/PC/013/2011R) ("the tender").

    [2] Before me, Mr Vetten appeared for the applicant and Mr Motepe appeared for the 1st,

    2nd and 3rd respondents. There was no appearance for the fourth respondent. The fourth

    respondent also did not file any papers.

    [3] The fourth respondent will be referred to as "Specsoft" and the respondents, as 1st to 3rd

    respondents or as "no 1", "no 2" or "no 3".

    Brief synopsis

    [4] On 11 May 2012, the first respondent issued a Request for Proposals ("the RFP") in

    relation to the provision of a codification system for implementation within the

    Department of Defence, for a five year period ("the tender"). This is nothing new. The

    existing codification system was already implemented in 1982.

    [5] The closing date of the bid was 14 June 2012. It had a tender validity period of 120 days.

    [6] There were four tenderers, but only the applicant and Specsoft had passed phase 1 of

    the process involving compliance with mandatory criteria for tender submission.

    [7] The applicant and Specsoft were then allowed to carry on with the tendering process

    and the other tenderers were excluded.

  • 3

    [8] No 2 is a committee created within the Department of Defence responsible for

    evaluation of the validity of tenders and for recommending to the third respondent the

    most suitable service provider in respect of the relevant goods and services.

    No 3 is a departmental Board within the Department of Defence responsible for

    awarding tenders upon recommendations from no 2.

    [9] No 2 unanimously and repeatedly (because no 3 kept on referring the matter back to

    no 2 for further consideration) recommended that the tender be awarded to the applicant.

    Broadly speaking, the applicant scored some 98 points and Specsoft only 35. The tender

    price offered by the applicant was some R119 million compared to the R348 million

    demanded by Specsoft. As to Broad Based Black Economic Empowerment ("BBBEE")

    the applicant is a level 3 contributor and Specsoft a (lower) level 4 contributor.

    [10] When no 3 persisted in its refusal to award the tender and kept on referring the matter

    back to no 2, the applicant, through its attorneys, on 6 December 2012, placed the

    respondents on terms to take a decision by 13 December 2012 failing which steps would

    be taken in terms of the Promotion of Administrative Justice Act 3 of 2000 ("PAJA") to

    force the respondents to make a decision.

    This threat, clearly, did not make a favourable impression on no 3, which resolved, on

    13 December 2014, to withdraw or "cancel" the tender.

  • 4

    The applicant's attorney was not informed of this withdrawal or cancellation and, on

    28 February 2013, the applicant obtained an order from this court directing no 3 to make

    a decision in relation to the award of the tender within 10 days of the service of that

    order.

    It was only thereafter, in March 2013, that the applicant was informed of the

    cancellation.

    [11] The applicant contends that the cancellation was unlawful because it flies in the face of

    the provisions of section 2 of the Preferential Procurement Policy Framework Act no 5

    of 2000 ("the PPPFA") and also contravenes the regulations promulgated in terms of

    that Act by Government Notice R510 of 8 June 2011. The applicant also contends that

    the reasons advanced for the purported cancellation are spurious and without any merit.

    [12] The applicant did not agree with the stance adopted by the respondents that it complied

    with the order of 28 February 2013 by cancelling the tender. The applicant, initially,

    asked for declaratory relief to the effect that the respondents are in contempt of that

    order but later abandoned its quest for that relief.

    [13] The respondents, in the Government Tender Bulletin, published another invitation to

    bidders to tender for a similar codification system, but the applicant obtained

    interdictory relief restraining the respondents from proceeding with a new tender

    process pending the outcome of this case.

  • 5

    [14] There were some interlocutory skirmishes between the parties when the respondents

    failed to timeously and comprehensively furnish the record of proceedings in terms of

    the requirements of rule 53. The applicant also obtained an order from this court

    compelling the respondents to file the record of their decision and reasons for the

    decision in the evaluation and withdrawal of the tender within 10 days of service of this

    order. On a general reading of the papers, the order was never, in my view, properly

    complied with. Northing further turns on this. I will not dwell on the subject. The

    record supplied enabled the applicant to file a supplementary affidavit in terms of rule

    53.

    [15] This application was launched in April 2013.

    [16] The relief now sought by the applicant, after abandoning the prayer for declaratory relief

    flowing from the alleged contempt of the order of February 2013, and after amending

    one of the prayers, now amounts to the following:

    1. Reviewing and setting aside the first, second and/or third respondents' decision

    to withdraw the tender issued under the relevant RFP (the terms "cancel" and

    "withdraw" have been loosely applied by the parties and, for present purposes,

    I regard them as having the same meaning).

    2. Reviewing and setting aside the first, second and/or third respondents' refusal to

    take a decision in the tender.

    3. Substituting the first, second and/or third respondents' decision and awarding the

    tender to the applicant. (There is an alternative prayer to refer the tender back

    to a differently constituted evaluation committee for decision in accordance with

  • 6

    the tender specifications and evaluation procedures, but, before me, the applicant

    pressed for the main relief of substituting the decision.)

    4. Ordering the first respondent to pay the costs.

    [17] So much for a brief synopsis of the case. I now turn to the relevant issues in more detail.

    The tender process and some notes on the chronological sequence of events

    [18] The RFP was for the "procurement of (a) ... Compliant Codification System with five

    year Maintenance (contract)".

    [19] The mandatory evaluation criteria involved four phases:

    1. phase 1: compliance with mandatory criteria for tender submission;

    2. phase 2: compliance with functionality, specification and scope of work

    (a threshold of 70% was required to progress);

    3. phase 3: price; and

    4. phase 4: BBBEE.

    [20] As mentioned, only the applicant and Specsoft passed phase 1.

    [21] The applicant and Specsoft were invited to a Power Point presentation of their respective

    bids to be held on 27 July 2012.

    [22] On 2 August 2012 a minute of the Technical Evaluation Committee's deliberations was

    produced. According to this, both the tenderers passed the 70% threshold. Members of

    no 2, having evaluated the tenders, "concluded unanimously that CFIT was the cheapest

  • 7

    bidder and possessed international experience and expertise in accordance with NATO

    standards. Accordingly CFIT was selected by the panel as the preferred bidder."

    [23] On 6 August 2012 no 2 prepared a submission to no 3, recording all the details and

    points scored (98 versus 35.74 in favour of the applicant) and the recommendation

    stated: "13 ... the requirement at stake be awarded to Messrs CFIT (Pty) Ltd with the

    highest points (98) and is in accordance with the specification".

    [24] On 8 August 2012 no 3 met to consider the submission. The recommendation was not

    accepted and the matter was referred back for four reasons which, in my view, have no

    merit. The one deals with a calculation error of a minor nature which is irrelevant in

    the greater context of the case and another one, which is also groundless, as will appear

    later, reads as follows:

    "(iii) On paragraph 5(b) of the Power Point verification report it is indicated

    that 'CFIT project is based on the five year contract period as per bid

    Terms of Reference (TOR). Specsoft pitched their project for a life cycle

    of 20 to 25 years.' The Board concluded that, in terms of the period, the

    bidders was not comparable and advised that the verification panel

    should have asked Specsoft to shrink everything to five (5) years as per

    the TOR ... asked Specsoft to break down their prices so that it could be

    understood."

    [25] On 21 August 2012 no 2 responded to the queries raised by no 3 on 8 August 2012

    pointing out that the Technical Evaluation Process was followed by the evaluation

    conducted through the Power Point presentation on 27 July 2012 where it was

  • 8

    established that both bidders had met the technical requirements. The process of

    technical evaluation was described again by an item-by-item comparison between the

    two tenders and this bid comparison demonstrated the manifest difference in the price

    between the respective tenderers. As indicated, the applicant scored 98 out of a possible

    100 points and Specsoft only 35.74 out of a total of 100 points. It was recorded that the

    recommendation was made in accordance with the so-called 90/10 principle.

    [26] Importantly, the recommendation that the contract be awarded to CFIT was repeated.

    This was now the second identical recommendation.

    [27] On 30 August 2012 no 3 met to discuss the minute. In terms of the minutes of their

    discussion no 3 again declined to approve the recommendation. The main "objection",

    such as it was, raised in the minute again had something to do with the "five year

    argument" the contents of which I quoted above. No 3 complained that Specsoft "was

    not afforded the opportunity to give a clear itemisation of costs and shrink everything

    to five (5) years as per the last Board resolution on 8 August 2012". No 3 demanded

    that the applicant "must be asked to demonstrate how their product will work on the

    ground". There was an instruction that the two bidders should be called once again to

    present to the verification panel and "this time Mat Gov should form part of that meeting

    and sign off".

    There was also a query about licence fees.

    [28] On 6 September 2012 the applicant was invited to attend a second compulsory Power

    Point presentation on 21 September 2012. Issues identified for reconfirmation included

  • 9

    that "the presentation must be strictly based on a five year contract period as per

    approved TOR", and "clarity must be made on cost break down as per already submitted

    quotation, especially on the once-off as well as licence renewal and system

    maintenance".

    [29] The applicant attended the second Power Point presentation on 21 September 2012 and

    so did Specsoft.

    [30] On 1 October 2012 no 2 produced minutes of the oral presentation carried out by the

    two bidders on 21 September 2012.

    In the minute, it is disclosed that the two bidders were re-invited to clarify the following:

    "(a) presentation must strictly be based on a five (5) year contract period as

    per approved Terms of Reference (TOR);

    (b) clarity must be made on cost break down as per already submitted

    quotation, especially on the once-off as well as licence renewal and

    system maintenance;

    (c) demonstration of the system especially on deployment."

    The minutes show that Mr Klein, on behalf of the applicant, "gave a well and

    informative presentation including demonstration of how the codification system or tool

    works especially on deployment. There were no questions asked in terms of the

    system."

  • 10

    Specsoft also confirmed that their bid price was for the five year contract. To this extent

    it appears, and seems to be common cause between the parties, that the two bids were

    "comparable". Unlike the conclusion by no 3, supra, on 8 August 2012, that "the

    bidders was (sic) not comparable".

    [31] Of particular interest, in my view, is the fact that the 21 September presentation by the

    two bidders was attended by Mr P M Mokoena who is the Deputy Director of Materials

    Governance ("Mat Gov"), also referred to as Materials Governance and Risk

    Compliance or "Mat GRC". Mr Mokoena prepared a lengthy report on the presentation

    which is dated 24 October 2012. I must assume that this report was prepared for the

    attention of no 3. In the report, Mr Mokoena also identifies the three issues which had

    to be clarified (quoted, supra, with reference to the minute by no 2) and in the report Mr

    Mokoena, inter alia, states that -

    "Mr Klein gave a clear and informative presentation of how the system works.

    There was a thorough demonstration on how the system works on deployment

    or mission areas. The system is web based; information can be loaded offline

    then be up loaded when system is back online."

    He said more or less the same about the presentation on behalf of Specsoft. In the report,

    Mr Mokoena again high lighted the difference in cost between what is offered by the

    two bidders: some R119 million by the applicant and some R348 million by Specsoft.

    Mr Mokoena then offers the following observation in conclusion: "Both

    companies/bidders gave clear presentation respectively in responding to the issues to be

    clarified or addressed." He therefore records that all outstanding points were regarded

  • 11

    as having been clarified. He confirms that the soft copies of presentations of both

    bidders were made available and given to representatives of no 2.

    [32] Significantly, Mr Mokoena raises no reservations about any of the bids. More

    significantly, Mr Mokoena is the deponent to the answering affidavit filed on behalf of

    the respondents.

    [33] On the same date, 24 October 2012, no 2 finalised a submission to no 3 under the

    heading "re-submission on the recommendation of bid ... for the procurement of ...

    National Codification System (NCS) with a five year maintenance period". This

    "re-submission" is a lengthy affair again traversing the whole history of the bids and the

    performance of the bidders and the clear superiority of the bid of the applicant, and also

    dealing with the last Power Point presentation of 21 September 2012.

    With regard to the original "five year argument" raised by no 3 when...

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